Egypt anticipates a ramp-up in oil volumes through the SUMED pipeline once Iran reenters the world market—a move that is welcomed by Cairo, the country's oil minister, Tarek El Molla, said on Friday. SUMED, which owns and operates Egypt's Mediterranean port of Sidi Kerir, is half owned by state-run oil company Egyptian General Petroleum Corp.
A group of four other Persian Gulf Arab countries—Saudi Arabia, Kuwait, the UAE and Qatar—owns the other half.
Since a July nuclear deal with world powers, Iran has repeatedly announced plans to boost oil production and exports once sanctions are lifted to reclaim its position as the Organization of Petroleum Exporting Countries' second-largest producer, Reuters reported.
"They used to work with us through SUMED. They used to store their crude there at Ain Sukhna terminal and Sidi Kerir," El Molla said on the sidelines of an Egypt investor forum in London.
"It will boost back again the activity of SUMED ... Of course I have no problem. But currently we are not talking with them."
The 320-km SUMED pipeline runs from the Red Sea to the port west of Alexandria. Western sanctions imposed on Iran's oil sector have brought shipments through Ain Sukhna and Sidi Kerir to a virtual halt since 2012, compounded by a freeze on insurance provision. The United States last month approved conditional sanctions waivers for Iran, although it cautioned these would not take effect until Tehran had curbed its nuclear program.
Once an energy exporter, Egypt has turned into a net importer because of declining oil and gas production and increasing consumption. It is trying to speed up production at recent discoveries to fill its energy gap as soon as possible.
The oil minister said exploration in the Western Desert had enabled Egypt to maintain steady oil production as new finds have offset declines from mature fields.
"Fifty-four to 55 percent of our crude is coming from the Western Desert, so it is the future and the potential of oil in Egypt," he said. El Molla said oil production would stay steady at around 700,000 barrels per day for the next two years, but may increase after that because of new wells.
"Keeping production at the level it is now is in itself a success, because you are netting off the natural decline in the reservoirs by adding new production of oil," he said.
